Small: Congress should end tax loophole for foreign businesses

Congress should end tax loophole for foreign businesses

By Jonathan Small

The “double drawback” loophole is a technical policy within federal trade law that is not widely known, yet it has a surprising connection to Oklahoma. The repeal of this loophole was included in the version of the One Big, Beautiful Bill that passed the House, but is missing from the Senate version of the bill.

That needs to change.

Here’s how the loophole works.

Governor Stitt, Seminole Nation agree to one-year tobacco compact extension

GOVERNOR AGRESS TO ONE-YEAR EXTENSION WITH SEMINOLE NATION ON TOBACCO COMPACT

Oklahoma City, Okla. (Jan. 3, 2020) – Governor Kevin Stitt announced today that the State of Oklahoma has agreed to a one-year extension with Seminole Nation on a Tobacco Tax Compact.

“The Tobacco Tax Compact is an agreement between the State and the Seminole Nation that the two sovereigns will split evenly the tax revenue generated from the sale of cigarettes and tobacco products at the Nation’s business locations,” said Gov. Kevin Stitt.

The Tobacco Tax Compact between the State of Oklahoma and the Seminole Nation was constituted in November 2013 under the Fallin administration. The compact establishes a Compact Tax rate of 100 percent of the State tax rate on cigarettes and other tobacco products. The state will collect the Compact Tax directly from the wholesalers, and then the State will remit back to the Seminole Nation 50 percent of all Compact Taxes collected. The one-year extension maintains current compact terms and adjusts the expiration date to Dec. 31, 2020.

A copy of the compact can be read here.

Over the past year, the Governor signed a total of five extensions for the State on various tribal compacts, with the other four as follows:

• The State of Oklahoma and Cherokee Nation signed a 1-year extension on a hunting and fishing compact, which can be read here.
• The State of Oklahoma and Choctaw Nation signed a 1-year extension on a hunting and fishing compact, which can be read here.
• The State of Oklahoma and the Kialegee Tribal Town signed an 8-month extension on the Model Gaming Compact, which can be read here.
• The State of Oklahoma and the United Keetoowah Band of Cherokee Indians signed an 8-month extension on the Model Gaming Compact, which can be read here.

Fallin signs teacher pay raise, tax hike package

Governor Mary Fallin Signs Revenue Package to Fund Largest Teacher Pay Raise in State History

OKLAHOMA CITY – Governor Mary Fallin, flanked by bipartisan legislators and joined by public school teachers, today signed three bills that are part of an historic revenue package to fund pay raises for teachers.

The package allows for a $6,100, or 16 percent, pay raise on average for Oklahoma teachers.

 “This is a very historic day in Oklahoma,” said Fallin. “By signing these measures, Oklahoma will move to second-highest in the region, up from the lowest, in average teacher pay. It is the largest teacher pay raise in the history of the state.

“I want to thank our legislative leaders from both parties for their tremendously hard work on these measures,” Fallin said.”I appreciate their long hours, and I commend the brave men and women in the House and Senate for their courageous action in voting for these bills. The legislation will fund teacher pay raises as well as provide additional money for the classroom, and set our state on a path of long-term budget stability by making more recurring revenue available and help stop the practice of balancing our budget with one-time funds. Teachers can expect to see a significant raise in their paychecks this fall.”

The governor signed:

• House Bill (HB) 1011XX, which puts a $17,000 cap on deductions on adjusted gross income. Charitable contributions and medical expenses are not capped.
• HB 1023XX, which establishes a new teacher salary schedule, the largest teacher pay increase in state history. Teachers will receive a $6,100 pay raise on average in the upcoming school year.
• HB 1010XX, which provides the revenue to fund the teacher pay raise. This is accomplished by an increase of $1 per pack of cigarettes; taxing little cigars at the same rate as cigarettes; raising the fuel tax by 3 cents a gallon on gasoline and 6 cents a gallon on diesel; and raising the gross production tax from 2 percent to 5 percent on all wells.

Senate passes $530M tax hike to fund teacher pay raises

Senate President Pro Tempore Mike Schulz was joined by Gov. Mary Fallin, Senate Appropriations Chairwoman Sen. Kim David, Senate Majority Floor Leader Greg Treat and Senate Appropriations Vice Chair Eddie Fields Wednesday evening following the Senate's approval of a teacher pay raise package.

Senate passes revenue package to fund teacher pay raises

OKLAHOMA CITY - The Oklahoma Senate on Wednesday passed a historic revenue package to fund a $6,100, or 16 percent, pay raise on average for Oklahoma teachers. That increase moves Oklahoma from seventh to second highest in the region in average teacher pay and is the largest teacher pay raise in the history of the state.

“The Oklahoma Senate took a historic step that will have positive and long-lasting impacts on the success of our state. One of the most important factors in the success of our students is a quality, professional teacher in the classroom. Passing the largest teacher pay raise in state history moves us to No. 2 in the region in average teacher pay and will help Oklahoma retain quality teachers. It’s a significant investment in economic development because an educated workforce is essential to growing and expanding our economy. For more than 15 months, the Senate has worked tirelessly to fund a significant teacher pay raise. This is a responsible plan that answers Oklahomans’ call for the Legislature to find a solution to teacher pay. I want to thank my colleagues in the Senate for their dedication to finding a solution and seeing a teacher pay raise come to fruition,” said Senate Pro Tem Mike Schulz, R-Altus.

HB 1010xx provides $447 million in revenue by increasing the gross production to 5 percent on all wells, increasing the cigarette tax $1 per pack, and increasing the gas tax 3 cents and the diesel tax 6 cents. 

The Senate also advanced HB 1011xx, which provides an additional $84.3 million for teacher pay by making changes to the state income tax code.

Education, State Employee Unions push $900M tax increase

Proposed $900M tax hike plan

Three education and state employee unions have proposed a massive $900M tax increase to go toward their $3.3 billion increased spending plan. Below is their press release, with details of their tax hikes in the image above:

Organizations Outline $906 Million in Funding Sources to Fund Education and Provide Raises for State Employees

School Closures Still a Real Possibility If Legislature Doesn’t Act Soon

OKLAHOMA CITY ­­– The Oklahoma Education Association, the Oklahoma City American Federation of Teachers and the Oklahoma Public Employees Association today outlined a number of funding sources the Oklahoma Legislature could tap to fund education and avoid a state-wide school shutdown.

The plan, as outlined by OEA Executive Director David DuVall during a press conference, identifies $905.7 million in recurring revenue.

“When we announced the possibility of closing schools earlier this month we intentionally left out a specific plan because we thought the legislature knew where to find money to properly fund our schools,” DuVall said. “While we appreciate the efforts to find some answers, they have all fallen woefully short.

“What we are offering today is a road map to sustainable funding for our state.”

OEA’s funding suggestions include:

• $158.7 million through a 5 percent gross production tax
• $222.9 million in tobacco taxes
• $149.1 million in motor fuel taxes
• $177 million in income tax reform, restoration of the earned income tax credit and elimination the capital gains deduction.

Other revenue sources include taxes on alcohol, car tags, ball and dice games at Native American casinos, a hotel/motel tax, sales tax reform and a tax on wind generation.

If the legislature were to use all of the proposed revenue sources, it would find more than enough money to provide teachers with a $6,000 raise for the 2018-19 school year, a $2,500 raise for education support professionals (e.g. custodians, food service workers, secretaries, transportation workers, etc.) next year, general revenue for schools to reduce class sizes and purchase classroom materials, a raise for state employees and money to fund health care services that have been cut in recent months.

“Our students are the real victims of the legislature’s failure to properly fund education and our state core government services,” said OEA President Alicia Priest.  “Our class sizes have ballooned to impossible numbers. Our schools can’t buy text books for every child. We’ve dropped not only fine arts and foreign language courses, we’ve also dropped advanced placement classes.”

The OEA was joined at the press conference by OPEA Communications Director Tom Dunning and Oklahoma City AFT President Ed Allen.

Allen said the teacher shortage has been caused by low salaries.

“The last thing educators want to do is walk out of school on April 2. But believe me, that is exactly what will happen if they don’t see a substantial and adequate pay increase,” Allen said “Teachers have been leaving the school district on a regular basis because of the miserable salaries. There was a 25 percent turnover in Oklahoma City in 2017 and it’s mostly because of the low wages. We need to keep and attract great teachers and a good start is to pay them a livable wage.”

Dunning pointed out that state employees are need of a pay increase, too.

“State employees, whose pay is more than 20 percent below market, stand with public educators to insist Oklahoma’s leaders pass a significant pay raise plan and begin to restore funding because they are fed up with excuses for why they can’t have a pay raise,” said Tom Dunning. “While they continue to serve, despite lack of support from many state leaders, employees expect lawmakers to fund a substantial pay raise plan and restore state agency funding. If lawmakers don’t act, state employees and those they serve will have many questions as they go to the polls this fall.”

Priest said the association is moving forward with closing all Oklahoma schools if the legislature can’t find a way to fund education by April 1. As of the press conference, more than 125 school boards had passed resolutions supporting teachers who walk out.

“The legislature has the ability to keep us in the classroom on April 2,” she said. “There is time in the next week to pass these measures and invest in our children.”

House Dems respond to newest budget cuts

House Democrats Respond to Newest Round of Budget Cuts

OKLAHOMA CITY – Rep. Steve Kouplen, on behalf of the Oklahoma House Democratic Caucus, has released the following statement on the $44 million worth of budget cuts passed on the House floor Monday:

“It is unconscionable that the Republican leadership in the House has led the state to the point where further cuts to the current year budget are inevitable. Today, the House sent $44 million worth of cuts to be approved by the Senate. We firmly believe that there are still options on the table to bring in a small portion of revenue for this year and put the state on a better path forward beginning the next fiscal year.

The House Democratic Caucus stands ready to commit all 28 of our votes to a bipartisan revenue package that includes the Republican Party’s cigarette and motor fuel taxes -- along with our original request to increase the incentive gross production tax to 5 percent that has now garnered support from State Auditor Gary Jones and the Oklahoma Council on Public Affairs. This package, coupled with the Senate passing the itemized deduction cap from 2017, would allow us to close the upcoming budget hole and provide teachers and state employees with a raise. With 100 percent of our caucus supporting, we would only need 48 Republicans, or 66 percent of the caucus, to pass this plan.

As we have mentioned in the past, it seems that the Republican Caucus is more worried about political cover while cutting agencies than actually finding a solution. Otherwise, we would be voting on revenue packages regularly until we find a combination that works.

Our fear is that as the race for the next Speaker of the House continues to heat up, we will continue to see fewer options for revenue and more of the same fiscal policy that has plagued this state for the last decade. Nevertheless, the House Democratic Caucus stands ready to negotiate at any time to prevent budget cuts and provide the revenue necessary for a teacher and state employee pay raise.”

OCPA column: A Better Plan

A Better Plan

by OCPA President Jonathan Small

It’s easy for insiders to support tax increases–much easier than it is for low- and middle-income families and small businesses to pay higher taxes.

That’s why the Oklahoma Council of Public Affairs has offered a revenue and reform plan. Our plan even received the endorsement of former U.S. Sen. Tom Coburn.

What’s missing from our plan? A messy income tax hike on those who can’t afford it. Included is the same $5,000 teacher pay raise that big government advocates keep using for their bait-and-switch games. It’s time to give teachers the pay raises they deserve and stop the rest of the bureaucracy from using teachers as pawns while state agencies refuse to reform.

“It’s time for the circus to end,” Sen. Coburn said, noting that “teachers, the most vulnerable, working Oklahomans, and small businesses are being held captive and will suffer damaging tax increases that will harm families and ruin future efforts for pro-growth tax reform.”

Our alternative plan would set gross production taxes to 5 percent on new wells for 36 months. It would increase cigarette taxes by 75 cents a pack. Wind tax credits would be capped at $10 million. Voters would be asked to approve shifting new settlement payments from the Tobacco Settlement Endowment Trust to the state’s Medicaid program, surely a worthy way to spend money earmarked for health. And, the Indian tribes would be asked to forgo $67 million in rebates on tobacco sales since they are also citizens of Oklahoma.

Those measures would pump $505.4 million into the state treasury to fund a $5,000 teacher pay raise. They wouldn’t make the tax code more complex or make revenue promises that are unlikely to materialize. And, they avoid burdening most families and working Oklahomans with more taxes.

If lawmakers are dead set on raising taxes, at least they should do it in the least damaging way. The more challenging but vital work remains: reforming and restructuring state government to prevent this annual exercise in panic budgeting from ever happening again.

We could start with rigorous audits of every state agency, questioning outcomes rather than just accounting for inputs, and by passing some real reforms like work requirements for able-bodied Medicaid recipients and allowing schools to use local revenues for top priorities like teacher pay. We should also end Oklahoma's Hollywood film handout that paid millions to Harvey Weinstein.

As Sen. Coburn said, “It’s time for politicians to do their number one job, which is tough and accountable oversight.”

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.

Jones playing dealmaker? House Dems join his budget proposal

At a press conference held a short time ago, State Auditor Gary Jones offered his solution to for a teacher and state employee pay raise, flanked by the House Democratic caucus, which endorsed his plan.

Jones' plan has some similarity to the OCPA proposal released on Monday, with the addition of the fuel tax increase. Jones said that this would simplify taxes by making the fuel taxes the same (diesel is currently taxed 3 cents less than gasoline) and the GPT and income tax the same (5%)

House Minority Leader Steve Kouplen (D-Beggs) pledged all 28 Democratic House votes for the plan, while Democrats also added that they'd like to take up the itemized-deduction cap bill that is sitting in the Senate (another ~$100M in more taxes new revenue).

OCPA offers ‘a plan that can pass’

OCPA offers ‘a plan that can pass’

OKLAHOMA CITY (Feb. 12, 2018) — On Monday, the Oklahoma Council of Public Affairs (OCPA) offered a revenue plan in hopes of breaking the tax-and-budget impasse at the state Capitol.

“Oklahomans want to see teachers receive a $5,000 pay raise, but they know this can be done without unnecessarily heavy tax increases on working families and small businesses,” OCPA chairman Larry Parman said.

“Many people have asked OCPA for, in their words, ‘a plan that can pass,’ something that doesn’t raise taxes on working families, something simple that doesn’t require lawmakers to go through much gnashing of teeth from state government bureaucrats and tax consumers, but that still funds a $5,000 teacher pay raise and prevents nursing homes and other critical services from going under.”

OCPA’s “plan that can pass” includes:

• A gross production tax increase to 5 percent for existing wells taxed at 2 percent and for all future wells for 36 months, and 7 percent thereafter—$199.5 million in new annual revenue
• A $0.75 per pack cigarette tax increase—$121.9 million in new annual revenue
• A cap of $10 million on the zero-emission tax credit for wind—$60 million in new annual available revenue
• Send to Oklahoma voters a ballot measure dedicating all new tobacco settlement payments that currently go to the Tobacco Settlement Endowment Trust (TSET) to the state’s Medicaid budget—$57 million in new annual revenue
• Tribes in Oklahoma step up and decline to accept any future rebates from the state for the sale of cigarettes and tobacco products—at least $67 million in new annual revenue

The OCPA plan provides the revenue necessary—$505.4 million annually—to address a $5,000 pay raise for every classroom teacher in Oklahoma public schools statewide.

“It’s time to give teachers the pay raise they deserve and provide the funding for it and stop the rest of the bureaucracy from using teachers as pawns while state agencies refuse to reform,” OCPA president Jonathan Small said. “This plan, once passed, would make revenues available within 90 days. We believe this plan is the fastest way to get our teachers the raise they deserve.”

A close reading of Gov. Mary Fallin’s Fiscal Year 2019 budget, released last week, reveals that the gap between base agency appropriations and estimated certified revenue has been completely eliminated. Gov. Fallin’s budget also indicates that recurring certified revenue exceeds last year’s recurring appropriations by $59 million.

Small said that with the budget deficit now resolved for Oklahoma’s state government, it’s time to focus on a narrowly tailored package that solves the teacher pay raise challenge and doesn’t include cumbersome, damaging tax increases on working Oklahoma families.

“We acknowledge there is not currently the political will at the state Capitol to enact targeted reform of nonessential spending or to rein in the mismanagement that has taken place at state agencies like the Health Department, the Health Care Authority, and elsewhere,” Small said.

Small added that several proposals from state lawmakers this legislative session should also be approved to ensure that existing taxpayer resources are directed to areas of highest priority.

“Each legislative session should be devoted to reforming government and exploring the expenditure of every penny paid in by taxpayers,” Small said. “Unfortunately, this hasn’t happened.”

A few such proposals under consideration in the current session include:

• A proposal to dedicate Commissioners of the Land Office funds for salary increases for teachers and other public-school personnel
• A proposal to place on the 2018 ballot a measure allowing public schools to utilize a larger percentage of ad valorem funds for teacher and staff compensation and other classroom-related expenditures, as opposed to being restricted to facility and technology upgrades
• A proposal to institute more thorough and frequent eligibility audits of the state’s Medicaid rolls, as has recently been done in Arkansas
• A proposal to model successful reforms in other states by implementing work requirements for able-bodied adults to empower them and protect Oklahoma’s exploding Medicaid program for the most vulnerable
• A proposal to end Oklahoma’s Hollywood film credit subsidy, which paid $4.6 million to Harvey Weinstein

Parman also called for a return to oversight and responsible governance.

“This plan solves the state government problem with which there is consensus and allows for a clean slate for the rest of special session and the regular session to focus on structurally reforming and transforming Oklahoma’s structurally flawed government,” Parman said. “It is a violation of the Oklahoma Standard for policymakers and government personnel to neglect their number one responsibility which is to responsibly govern and protect the most vulnerable and taxpayers.”

“Not another penny in tax increases after this package passes should be considered at least until all of Oklahoma’s top twenty appropriated agencies have thorough financial audits, thorough performance and process improvement audits, and government personnel employment structures are reformed.”


Statement from Dr. Tom Coburn:
“For nearly eight years now, the executive branch, the bureaucracy, special interests, and even some legislators have predominantly been obsessed with trying to figure out how to get more revenue out of Oklahomans or expand government’s spending role in Oklahomans’ lives. They have thwarted efforts to truly transform government so it works better with less—and now are insisting on either tax increases or even more dysfunctional government.

“Because of their false choices, and the accompanying deterioration, teachers, the most vulnerable, working Oklahomans, and small businesses are being held captive and will suffer damaging tax increases that will harm families and ruin future efforts for pro-growth tax reform.

“To prevent that damage from occurring, this proposal by OCPA provides the best way, given the unfortunate circumstances, to give hardworking teachers the pay raise they have earned, protect the most vulnerable, and protect working Oklahomans and small businesses from damaging tax increases.

“It’s time for the circus to end. This narrowly tailored package proposed by OCPA will prioritize what’s important. It’s time for politicians to do their number one job which is tough and accountable oversight. It’s a violation of the Oklahoma Standard to raise taxes on the most vulnerable, working Oklahomans and small businesses when fraud and mismanagement is occurring at the Oklahoma Health Department, the state Medicaid budget is out of control and scores of opportunities for efficiency and savings are avoided. It’s time for politicians to do the tough work of responsible fiscal governance, structural reform and transformational policy solutions that end income the failed status quo of government operation — as promised.”

BONUS: Video of the press conference is below.

Tax Hike vote expected today: contact your legislators!

 

The Oklahoma Legislature is expected to vote on about $620M in new taxes and expanded gambling today.

These tax increases include:

• ~$243M in higher cigarette taxes
• ~$172M in higher gasoline and diesel fuel taxes
• ~$133M in a Gross Production Tax increase on oil and natural gas
• ~$20M in higher wind energy taxes
• ~$14M in taxes on little cigars and smokeless tobacco
• Expanding gambling games to bring in $22M per year
• Changes in the standard deduction ($40M in new income tax collections)

Multiple groups are working to stop these tax increases from passing, and have set up handy tools to help Oklahomans contact their legislators. Use the links below to contact your local legislators:

OCPA Impact: Tax Increases Are Moving Fast! Take Action Now!

AFP-Oklahoma: Tell Your Lawmakers "Oklahoma Can Do Better!"

No New Oklahoma Taxes: Tell Oklahoma's Leaders Not to Support a $1 BILLION Tax Increase!

To call, use the phone numbers below:

House of Representatives: 405-521-2711
State Senate: 405-524-0126
Gov. Fallin: 405-521-2342

Some basic points on Fallin's proposed budget

In her State of the State address yesterday, Governor Mary Fallin presented her final executive budget proposal for FY-2019. The document in full can be viewed here.

A few quick basic points:

• Total proposed budget: $7.28B
• New revenue (98% from tax hikes): $696.3M
• Cigarette tax: $231.7M
• GPT on oil and gas: $126.7M
• Little cigars and chewing tobacco: $12.2M
• Motor fuel tax: $163.4M
• GPT on wind: $19.2M
• Income tax: $129.2M
• New spending over FY-2018 budget: $723.6M
• $5000 teacher pay raise ($289M)
• $286.1M in one-time spending ($141.8 to Health Care Authority)
• $55.5M to restore transportation funding
• $25M to Mental Health for criminal justice reform
• $10.5M to Corrections
• $2M to Legislative Services Bureau for "Agency Performance and Accountability efforts"

A few other takeaways:

The strangely shrinking cigarette tax figure: in Fallin's FY2018 budget, the estimate for revenue generated by a $1.50 increase in the cigarette tax was $257.8M. During the first special session, HB1054X estimated $243.5M per year. Now, in Fallin's FY2019 budget, it's $231.7M from the same $1.50 increase.

No more efficiency? OCPA's Trent England:

More gambling is what we need? "The Step Up Oklahoma Plan includes a reform to allow Indian casinos to use balls and dice in their craps and roulette games, which will likely increase the state’s revenue from exclusivity fees. [...] It would be in the state’s best fiscal interest to consider this proposal, via the Tribal and State Gaming Compact. These efforts will maximize projected revenues for the State of Oklahoma."  That's right... if Oklahoma needs anything else, we need more gambling, more addiction, more bankruptcy, and more broken families as a result.

Step Up Oklahoma too positive on tax revenue? Governor Fallin takes up every tax hike proposed by Step Up Oklahoma in her budget proposal, but the figures her office used as estimates are lower in every category, to the tune of about $45M overall (excluding the gambling figures, which her office did not estimate).

House to move swiftly next week on Step Up Oklahoma tax hikes

In comments to the Oklahoman, House Speaker Charles McCall (R-Atoka) anticipates that the State House will move quickly to take up the "revenue raising" (i.e. tax increasing) portions of the Step Up Oklahoma plan put forward by Governor Fallin's oligarchs community and business leaders' group.

The Step Up Oklahoma plan includes about $750M in new taxes, raised via increasing the cigarette tax ($243M), GPT ($133M), gasoline and diesel tax ($170M), income tax ($144M), and a vareity of smaller tax increases and expansions.

Session begins on Monday, and McCall believes they will begin voting sometime during the week on elements of the Step Up plan.

Fallin amends 2nd Special Session call to include tax hikes

Governor Mary Fallin Amends Second Special Session Call

OKLAHOMA CITY – Governor Mary Fallin today amended the call of the second special session of the 56th Legislature, which has been in recess since Dec. 22.

The governor did not set a date when lawmakers would return to address the shortfall in the current fiscal year budget.

“Discussions are continuing about a revenue and reform plan, which seems to be growing in momentum,” said Fallin. “We’re excited that we have an opportunity to build some grass-roots support among our fellow Oklahomans to solve our budget crisis, to be able to put Oklahoma on a stable path forward, and to provide teachers a much-needed pay raise.”

The governor’s amended call asks lawmakers to consider providing a long-term revenue solution to the state’s budget shortfalls by:

• Increasing the tax on cigarettes, and little cigars by $1.50 per pack, and an additional 10 percent on chewing tobacco and e-cigarettes;
• Increasing the oil and gas gross production tax by increasing the rate on wells currently at 2 percent to 4 percent, and all future wells will begin at 4 percent for 36 months and move to 7 percent thereafter;
• Implementing a renewable generation tax at $1.00 per MWH;
• Increasing the rate on diesel and gasoline by 6 cents per gallon;
• Imposing a dollar cap on transferability/cash refundability for coal, wind and railroad tax credits effective the 2018 tax year;
• Expanding the definition of covered games in the model tribal gaming compact to include “non-house-banked table games;” and;
• Reforming rates, exemptions, deductions and credits on the individual income tax code.

Other items in the governor's call are:

• Creating an accountability office designed to expose waste, fraud and abuse of taxpayers’ dollars in state government;
• Modifying the structure of state government and increasing accountability by replacing the appointing power of specified boards and commissions with granting the governor direct appointing authority over these specified agency directors.  This can be accomplished by statutory change or by referring a constitutional change to a vote of the people when necessary, and;
• Addressing a needed $5,000 pay increase for certified education staff, excluding any superintendents.

 The items in the governor’s call mirror many of the items recommended by Step Up Oklahoma, a group of Oklahoma business and community leaders.

“I appreciate the efforts of these business and community leaders working together to build statewide, nonpartisan support to help the Legislature address teacher pay raises and fix our budget crisis,” Fallin said. “It is critical to our state's future to fix the budget's structural problems and put our state on a predictable, stable foundation for success. I’m optimistic, with the effort and determination shown by Step Up Oklahoma, that lawmakers can pass a realistic solution to the state’s current budget problem.”

Fallin's "Community Leaders" working group releases tax hike, budget reform plan

Oklahoma Business Leaders Call For Reform And Revenue Measures

Package includes $5,000 teacher pay raise

OKLAHOMA CITY – (January 11, 2018) — A nonpartisan group of Oklahoma business, civic and community leaders announced today a combination of reform and revenue measures to drive efficiencies, eliminate abuse and waste, and raise revenue to support a $5,000 salary increase for teachers and to fund core services.

The group has formed “Step Up Oklahoma” with rural and urban representatives from diverse business and organizational backgrounds. The group is united in its desire to work with state leaders to resolve Oklahoma’s budget crisis. The group is advancing a plan that addresses waste and abuse through reforms and ending the boom and bust cycle of state government through revenue enhancements.

Reforms support recent calls from elected officials for greater efficiencies and accountability in state government. Revenues in the plan will provide funding for education, health care and other core services.

“Legislative leaders and the governor are all focused on solutions and this is encouraging,” commented David Rainbolt, BancFirst executive chairman and Step Up member. “It’s no longer enough for business leaders to play Monday morning quarterback. We’ve got to step up to partner with our elected officials in finding solutions and bringing citizen support that helps everyone to make the tough choices that will move Oklahoma forward.” Rainbolt continued, “We must all support efforts to stabilize the budget while at the same time enacting real reforms. Revenue combined with reforms will put our state on a firm foundation to better serve our citizens. While this plan is not perfect, it puts the state on a positive trajectory.” The government reform measures will give lawmakers the tools they need to root out waste and allow time for long-term planning to put into place greater accountability.

“We are serious about the reforms,” commented Tucker Link, founder and chairman of Knightsbridge Investments and an OSU/A&M Regent and Step Up member. “Rural Oklahoma has been hit particularly hard by our budget challenges. Hospitals are closing and schools are struggling to keep their doors open. While many of these reforms will require constitutional changes and take time, we believe they need to be on the table. Oklahomans want their government to run efficiently, and they want quality core services. This plan will do that.”

“Education is the key to building a better Oklahoma,” commented Phil Albert, President of Pelco Structural, OU Regent and Step Up member. “Teachers are the difference makers. To attract and retain fine teachers, we must compensate them adequately. The time to act on teacher salaries is now.” The plan will raise $800 million with over $250 million to support teacher salary increases and the remainder to support core services. “Our citizens want a financially sound and efficiently managed state,” Rainbolt said. “This plan will reverse our course and revive our future for the benefit of all Oklahomans.”

REFORMS

• Increase teacher pay by $5,000
• Revise the state budget to reflect accurate numbers
• Require line-item budgets
• Modify term limits
• Lower the supermajority required to raise revenue
• Establish a budget stabilization fund
• Give the governor direct appointment power over the largest state agencies
• Make the governor and lieutenant governor running mates
• Change the process to fill Supreme Court vacancies
• Create an independent budget office to assist with eliminating waste
• Allow voters to decide the structure of each county’s government

REVENUE

The nonpartisan group developed a broad compromise plan which affects taxes on:
• Cigarettes, little cigars, chewing tobacco and e-cigarettes
• The energy industry, including the gross production tax
• Motor fuels
• Wind-power generation
• Refundable income tax credits
• Gaming activities
• Personal income tax

For more information, visit StepUpOklahoma.com.

House does reboot on $454M tax increase, floor vote tomorrow

Yesterday, the State Senate passed HB1035X in a manner that brought up constitutionality questions (I posted on that here). Rather than proceeding down a road that could result in another Supreme Court ruling it unconstitutional, the State House decided today to avoid those issues, and do a "reboot" of the measure.

Here's what Majority Floor Leader Jon Echols (R-OKC) said on Twitter:

It will be HB 1054. Identical to bill passed by Senate but removes all doubt as to constitutional process. Senate agrees with this move.

— Jon Echols (@jonechols) November 7, 2017

From State Rep. Josh Cockroft (R-Tecumseh):

Yesterday the Oklahoma Senate heard HB1035 which had passed off the House Floor two weeks ago. This bill included a cigarette tax, a motor vehicle fuel tax, and an alcohol tax. They added language including a 4% Gross Production Tax on the Senate Floor and passed it 37-5. This essentially made it the same bill which I voted for in the Budget Committee last week(HB1054), but failed to gain enough support in that committee.

This is where it gets tricky: Questions of constitutionality were immediately raised since a revenue raising bill must start in the House. Because HB1035 passed from the House with 54 votes, but failed to gain the required 76 votes a revenue raising measure must have, constitutionally it wasn’t viewed as a revenue raising measure. Instead it would have gone to the ballot for the people to vote on. When the Senate changed the revenue raising language and voted it through with over the 75% required, it called into question the legality of advancing the bill any further.

Today during negotiations between the Governor, Senate, and House an agreement was reached not to hear HB1035 in the House. Instead, HB1054 with the exact same language as HB1035 as passed by the Senate, would be brought up again in the House budget committee and moved forward.

The language from HB1035X was placed into HB1054X (which deadlocked in a tie during committee vote on October 27th), and the Joint Committee on Appropriations passed the measure 19-6. The measure will now be taken up on the House floor tomorrow.

HB1054X is projected to bring in $455M in taxes annually, and $140M for the remainder of the current fiscal year:

•  Cigarette tax increase: $243.5M annually
• Mixed beverage tax on low-point beer: $14.5M annually
• 6-cent increase on gasoline and diesel tax: $170.4M annually
• GPT increase from 2% to 4% after 36 months: $13.4M annually
• Miscellaneous tobacco taxes: $12.9M annually
• TOTAL = $454,859,000 annually

State Senate passes $440M+ tax hike

The State Senate today voted 37-5 to increase taxes by over $440M annually. HB1035X, which was passed by the House on October 25th (by a vote of 55-44), was amended on the Senate floor and cleared the three-fourths hurdle for tax increases by one vote.

HB1035X increases these taxes (the first 6 were in the House version; the Senate struck one, and added a seventh):

• Increase Cigarette Excise Tax ($1.50 per pack): $107.4M for FY18, $243.5M for FY19 and following
• Apply 13.5% Mixed Beverage Tax on low-point beer: $14.5M for FY18, $14.5M for FY19 and following
• Increase Excise Tax on Gasoline and Diesel by 6¢ per gallon: $56.8M for FY18, $170.4M for FY19 and following
• Tax Little Cigars as Cigarettes: $694K for FY18, $1.6M for FY19 and following
• Increase on smokeless tobacco products: $3.7M for FY18, $11.2M for FY19 and following
• Reduce discount on cigarette stamps from 15¢ to 1¢: $495K for FY18, $1.2M for FY19 and following The Senate version nixed this from the House version
• SENATE ADDED - increase the gross production tax on new wells from 2% to 4% (goes to 7% after 7 years): fiscal impact not given, but likely in the tens of millions

Without adding the unknown sum for the GPT increase, the projected total in new tax collections for the remainder of FY18 would be $183,263,000, while the total for following fiscal years would be $441,390,000.

SoonerPolitics.org has the roll call vote list -- the State Senate has not posted the roll call on their website at this hour. All five no votes were Republicans.

More to come on this later.

BREAKING: Fallin, Schulz and McCall announce Special Session Budget Agreement

Special Session Budget Agreement Reached

OKLAHOMA CITY – Governor Mary Fallin, Senate President Pro Tempore Mike Schulz and House Speaker Charles McCall today reached an agreement adjusting the 2018 fiscal year budget that, among other things, helps fill the $215 million budget hole and puts Oklahoma on a more stable budget path, as well as provides a needed teacher pay raise.

If passed by the Legislature, the agreement would:

• Place a $1.50 tax on a package of cigarettes.
• Provide for a 6-cent fuel tax increase.
• Revise taxes on alcoholic beverages.
• Restore the Earned Income Tax credit.
• Provide for a $3,000 teacher pay increase, effective Aug. 1, 2018.
• Provide for a $1,000 increase for state employees, effective Aug. 1, 2018. It does not pertain to higher education, legislators or constitutional officers, such as statewide elected officials and judges.

“This agreement is the result of countless hours of discussions and meetings,” said Fallin. “I appreciate President Pro Tem Schulz and Speaker McCall working to provide a long-term solution to our state’s continuing budget shortfalls. It is apparent that rapid changes in our economy have created unsustainable and unpredictable revenue collection patterns. We need to seek long-term sustainability and stability as opposed to unpredictability and volatility. This agreement makes more recurring revenue available, helps us stop balancing our budget with one-time funds, and provides a teacher pay raise as well as a raise for our hard-working state employees, who have not had an across-the-board pay increase in eleven years. And, most importantly, it provides sufficient revenues to meet the basic responsibilities of state government, such as education, health and public safety. We must deliver services that work for the people, and put people over politics.”

Schulz said: The Legislature has a tremendous opportunity with this deal to solve our immediate budget crisis, put the state on more solid financial ground moving forward, and deliver on a much-needed and much-deserved pay raise for classroom teachers and most state employees. As Senate leader, I’ve stressed to senators the importance of long-term thinking and planning. This deal gives us the chance to deliver on that, and institute reforms that will have a tremendous impact on our state for years to come. I appreciate Governor Fallin and her staff, Speaker McCall and his team, and the members of the Senate leadership team for their hard work in bringing this deal to fruition.”

 McCall said: “We believe this plan gives us the best opportunity to pass the House and Senate, and provide the state with needed revenue to stabilize mental health and substance abuse programs, keep rural hospitals open, and provide a pay raise that would make Oklahoma teachers the highest paid in the region for starting pay. This plan also provides recurring revenue for transportation infrastructure and restores the Earned Income Tax Credit for low-income Oklahomans, which more than offsets any increased consumption costs for low-income earners.”

Special Session Teacher Pay Raise: Worthy Goal, but Misguided Timing

Oklahoma has budget issues. People may not agree on what exactly the problems are, or what solutions are needed to remedy them, but everyone can agree that there are things that need to be changed when it comes to the state's fiscal situation.

Some think we spend too much, and are involved in areas that government doesn't belong. Others think we tax too little, and that government needs to be more involved.

The Legislature is currently in a special session to address a $215,000,000.00 "shortfall" due to appropriations being made on the back of an unconstitutional tax increase. Once the Oklahoma Supreme Court struck the illegal measure down, it created a large hole in the budgets of four state agencies: the Oklahoma Health Care Authority, the Alcoholic Beverage Laws Enforcement Commission, the Department of Human Services, and the Department of Mental Health and Substance Abuse Services.

Legislators have been wrangling over how to address the situation, but negotiations have not gone anywhere yet. Differences between the Republican and Democrat plans, differences in the Republican caucus, and differences between the House, Senate and Governor have played roles in the delay.

Another issue is that the Governor and some legislative leaders are actually seeking to grow the deficit, thus creating the need for deeper cuts or steeper tax hikes to fill the hole (naturally, the primary route they are exploring is tax increases). Governor Fallin and legislative leaders are hoping to get a teacher pay raise passed in this special session. This was not accomplished during the last several regular sessions due to lack of available funds.

Everybody wants to give teachers a pay raise. Contrary to what the Democrats and the education lobby constantly claim, there are no "anti-Education" members of the state legislature. There is not a single legislator that wants to harm education (ironically, the same Democrats who claim that Republican are "anti-Education" tend to fight Republican efforts to direct more dollars into the classroom - who's really harming education there?). Every legislator understands the need for top-notch education for Oklahoma's children, and one of the strategies for accomplishing that is attracting and maintaining quality teachers.

However, the time has to be right. You can't spend extra money when you're already short a significant amount. Let's illustrate this.

A family has fallen on hard times. They have no money left in their savings account, the family vehicle is about to be repossessed, they've got $25,000 in credit card debt, and they're falling behind on their utility bills. As they contemplate how best to resolve their financial situation, they decide that before doing so they will first purchase a brand-new television and some new furniture for the living areas. After they expend several thousand more dollars, they will then tackle the issue of their dire financial straits.

That's essentially what the Governor and legislature want to do by adding to the shortfall with increased spending. Leave it to them to come in for a special session to deal with a $215M shortage that they caused by unconstitutional actions, increase that shortfall by several hundred million dollars, and then raise taxes to 'fix' it.

When you have a deficit, it is not the right solution to spend more money.

A teacher pay raise is a worthy goal, and one that every legislator and sensible person would like to see happen. However, raising taxes on Oklahomans is not the way to accomplish it.

Let's not forget that in 2016, Oklahomans overwhelmingly defeated a tax that was specifically dedicated to providing education with more funds. It wasn't even close, despite the pro-SQ779 side massively outspending the anti-SQ779 side $7,116,573.32 to $884,874.92.

Oklahoma is in the current budget situation for a host of issues, but one of the primary reasons is that bad economic times have hurt taxpayers and businesses alike, reducing income and in turn spending, resulting in less taxes to collect. Raising taxes now adds insult to injury.

The state legislature should limit this special session to specifically dealing with the shortfall created by their unconstitutional actions. Anything else should be considered in the regular session starting in February, allowing the proper time for transparency, public input, and thorough study by legislators.

The unconstitutional passage of the Smoking Cessation Fee cigarette tax was due to haste. Things are rarely done well when hurried. Legislators should ponder that.

A teacher pay raise is a worthy goal, but doing so during this special session and through tax hikes is misguided.

Richardson blames Fallin, Lamb for Special Session impasse

Richardson Calls Breakdown at Special Session "Lack of Conservative Leadership"

Tulsa, OK, September 26, 2017 – Gary Richardson called on the Governor, the Speaker of the House, and the President of the Senate to come together to bring a conservative solution to the special session in the midst of the House going into recess over the failure of a clear plan.

"What happened today is the result of frustration from a lack of conservative leadership from Governor Fallin and Lt. Governor Todd Lamb, " said Richardson.  "We have the Governor threatening to veto anything that isn't a tax increase, and a Lt. Governor who sits on the sideline while the Senate he can take over anytime as President of the Senate proposed a $1.50 cigarette tax increase and a 6-cent increase on the gasoline tax."

Richardson then explained how the Oklahoma Lt. Governor is the one constitutionally in charge of the State Senate.  "According to Article 5, Section 28 of the State Constitution, the Lt. Governor is the one who presides over the State Senate," said Richardson.  "Lamb could fulfill his constitutional powers as President of the Senate and block any tax increases.  Yet the silence of Lamb is deafening."

"Luckily, a core group of conservative Republicans who understand that we have a spending problem and not a revenue problem are standing strong against any tax increase, which led to the recess of the State House today," said Richardson.   "It's time we have a Governor and Lt. Governor who will join these conservatives and lead on the Republican principles they campaigned on."

Gary Richardson is a Republican candidate for Governor of Oklahoma.  He is a former U.S. Attorney appointed by President Ronald Reagan and a founding member of the law firm, Richardson, Richardson, and Boudreaux.  Gary and his wife, Lanna, reside in Tulsa. Together, they have five children and eleven grandchildren. They are active members of South Tulsa Baptist Church.  Learn more at GaryRichardson.org.

Schulz releases Senate GOP budget plan for special session

Pro Tem releases Senate GOP budget plan

OKLAHOMA CITY – Oklahoma Senate President Pro Tempore Mike Schulz on Monday released the Senate Republicans' plan to address the $215 million hole in the Fiscal Year 2018 state budget.

“This plan not only addresses the immediate need of $215 million for critical health care agencies that was struck down in court, but it also provides recurring  revenue streams to help us address the long-term stability of the budget and prevent further cuts to core government services,” said Schulz, R-Altus.

“Oklahoma Senate Republicans have proven our willingness to address the state's long-term budget problems by passing a similar revenue package during the regular session. The elements of this plan for special session were fully vetted by the Senate during the regular session, and all received the necessary votes to pass constitutional muster. I’m confident Senate Republicans, if given the chance, again will put Oklahoma’s interests first and will be able to pass this responsible revenue plan that ensures education, public safety, transportation and other core services avoid further cuts.”

The Senate plan is as follows:

• $1.50 per-pack increase in the cigarette tax, which generates $128.9 million in Fiscal Year 2018 and leaves $122.4 million for FY’18 appropriation;
• a six-cent increase in the motor fuels tax, which generates $71 million in FY’18 and leaves $67.45 million for FY’18 appropriation; and
• the elimination of the wind manufacturer sales tax exemption, which generates $10.97 million in FY’18 and leaves $9.87 million for FY’18 appropriation.

Because FY’18 collections are for less than a full fiscal year, the Senate plan also calls for a drawdown of $15.2 million from the Rainy Day Fund to entirely plug the hole in the FY’18 budget.

The governor’s call for special session included other issues like a teacher pay raise and finding more efficiency in government spending. Schulz said while the immediate need is addressing the FY’18 budget hole, Senate Republicans were open to considering those issues during the special session.

“Senate Republicans have said all along we must first address the short-term budget issues before acting on a teacher pay raise plan. Once we take care of the budget, Senate Republicans would consider a teacher pay plan that includes a permanent funding source,” Schulz said. “Additionally, Senate Republicans will keep working on making government more efficient and effective. We’ll keep pouring over agency spending and look at options like consolidation to improve the quality and delivery of services. There’s no doubt agencies can be more efficient in spending taxpayer dollars, and Senate Republicans will keep working on behalf of Oklahomans to make sure that happens.”